https://competitionandmarkets.blog.gov.uk/2016/08/04/legal-services-and-regulation-in-a-modern-market-place/

Legal services and regulation in a modern market place

Lawyer helping a client

Many markets are evolving in a way which is fundamentally changing how buyers and sellers interact.

There’s been a rapid growth of digital sales channels, comparison sites and feedback tools, and existing products and services are being provided in different ways.  This can lead to real benefits for consumers, but only if consumers have the information and confidence to shop around and use new providers.

What are the implications for regulators? Traditionally, regulation has focused on protecting consumers directly, for example by capping prices or setting minimum quality standards.  But increasingly regulators can also help to stimulate innovation and new business models and help consumers to protect themselves by giving them the tools and confidence to engage in new markets.

We’ve been considering these issues as part of our legal services market study.  At the moment, most people choose legal services based on recommendations from friends, family and peers. This is often a sensible way to ensure a minimum level of quality. But it means that they’re not checking for themselves what the market has to offer. Our consumer survey found that only 22% of consumers had compared 2 or more providers when choosing a legal adviser.

This makes it difficult for new entrants or business models to gain ground.  There's been some innovation – for example, it’s possible for an online law firm to provide legal documents or legal advice without needing a presence on the high street.  However, the pace of innovation has been slow, in part because customers seem slow to switch to new providers.

It also means that some consumers are paying much more than they need to for services where cheaper prices are available.  Research suggests the price of a standard simple will may vary from around £110 to £200.  The price for a complex divorce with a dispute over assets may vary from around £1,260 to £3,000.

Recent Legal Services Board research found that only 17% of providers publish their prices online. And in contrast to other sectors, there are very few comparison websites available to consumers. Those sites that do exist or are trying to launch find that some legal service providers are unwilling to co-operate.
We think that there needs to be a concerted effort to introduce greater transparency of price and service quality in the legal services market.  Our interim report, published in July, set out some initial ideas on how to achieve this.

We’re now very keen to hear the views of legal service providers, consumers and others before we make final recommendations around the end of this year, so please get in touch at legal.services@cma.gsi.gov.uk or leave a comment below.